Aggressive anti-rental email response from MS

[we"reofftoneverland]

Eh, it's a little different, but not much. I followed trackers back then. Now, trackers don't work, but I look at this a whole lot.

The most popular rooms, value standard club studios, BC and BW studios, are walked now and were then. Recent booking has added some new stuff, like the BLT 1BR and CCV studios and VGF1 studios. The biggest recent change I've seen is GVs. When I bought my SSR it was intending to buy GVs, and those have def tightened in the 7-11 month category.

The system works if you are able to book SSR studio, which you still are, most of the time. This isn't a problem for DVC yet because members haven't made it one.

I look at this a lot too. We have over 1000 points and we use them. Have never rented any points out. And we change reservations a lot because of work/school things coming up. So I am on there all the time. And system is definitely less flexible than it was. Lately sometimes I cannot find one room available. That never happened to me

That's a little too strict to me. I rented points out this year for the first time ever because I had banked 2021 points with the thought that I could possibly get a VGC reservation at the 7 month window, little did I know. That left me in a position where I had almost a full year of points that would have gone to waste because my plans of going to DL aren't changing and I couldn't use those points otherwise. So I listed them on a rental site and booked a reservation for someone else. But by your definition there I'm now a commercial rental despite doing this once in 11 years of ownership.

right so Disney could allow for 1 or 2 a year per membership, just like they do for transfers

 

[Genie+]

There’s a pretty clear distinction between:

spec renting and owners casually renting points
members personally using a majority of their points vs contracts never having the same names using the points
booking trends and abilities of professional vs casual owners

Can DVC address confirmed reservations through 3rd parties as commercial usage? I think something like that would have a positive impact for members. Casual owners can still rent and use their contracts for friends and family, but that would seriously dampen purely profit driven contracts. There’s a multitude of ways that has negative impacts.

 

[Sandisw]

There’s a pretty clear distinction between:

spec renting and owners casually renting points
members personally using a majority of their points vs contracts never having the same names using the points
booking trends and abilities of professional vs casual owners

Can DVC address confirmed reservations through 3rd parties as commercial usage? I think something like that would have a positive impact for members. Casual owners can still rent and use their contracts for friends and family, but that would seriously dampen purely profit driven contracts. There’s a multitude of ways that has negative impacts.

The problem is that DVC only has access to our memberships to see what is booked.

To find those spec rentals, they would have to Go through all DVC memberships to find those exact weeks booked and try to match them. And then decide if that is the one that is being advertised. Not sure how they do that as the POS says you don’t need DVC approval for a rental.

And, if any owner keeps their name on it until closer to check in, not much can be done until that changes?

I think that is why they had to set the definition based on # of reservations.

 

[KAT4DISNEY]

It says in the contract that Disney can limit “commercial” rentals. That could be interpreted as any rental that generates profit.

Business wise that is not true. An interpretation like that would not stand up to challenge.

 

[tom1944]

I'd define commercial rentals as any rental where a third party gets a fee.


Agree. Getting rid of rentals that generate a fee would still allow for members to rent/gift stays to friends and acquaintances, and probably even allow for things like the rent and trade board here.

I think that makes sense

 

[tjkraz]

We can disagree on this, but I think all DVC would need to do is go after one commercial renter using a broker of some kind (in volume). If they could win that case and establish that broker rentals go against the POS, then they could threaten everyone else out of the business. Businesses like Davids could be forced to turn over their client lists.

DVC could try to block a frequent renter who is confirmed using a broker to rent their points. They could lock member accounts and cancel reservations. These punitive actions would trickle-down on the broker since they offer a guarantee that the renter will have a room waiting. Eventually this *COULD* cause brokers enough harm that it would force them out of business.

(All of the above is firmly hypothetical until we see actual criteria that Disney believes it can use to identify "commercial" activity. All of us here on a message board may have some vague agreement about what constitutes a commercial rental. Disney has to be much more specific before they start canceling reservations and locking accounts. And depending on how broad their definition may be and how aggressive they are in restricting people's use of points which are bought and paid for, Disney could easily get sued over it.)

Beyond that, Disney has absolutely no grounds to force a broker to turn over a client list. The DVC contract is between Disney and the member. There's no business relationship between Disney and a broker.

DVC probably has other options besides taking legal action. If I were them, I'd quietly make offers to the rental whales to buy back their points to clear out some of the rental market and avoid public scrutiny.

Problem is the "rental market" you refer to is not static. There are parties who actively purchase contracts, rent-out a portion of the points and then sell the contract. They'll buy more points next week, next month, next year, etc. It's an endless cycle.

These folks seem like an easy target for Disney if they want to disrupt the rental market. But it hasn't happened yet.

 

[we"reofftoneverland]

Business wise that is not true. An interpretation like that would not stand up to challenge.

I agree that commercial is a vague term. And I think Disney is using a vague term on purpose.
This is from a business school textbook (yes we have MBAs in the house lol):

• Commercial refers to activities of commerce—operations to earn profits.
• Non-commercial activity can be conducted by non-profit organizations or government agencies.

Now, that does not mean that Disney will apply that definition. But clearly in putting the broad term “commercial” in the POS, they are giving themselves the option to do what they want now and in the future.

Another way I think about it is if the government says it’s taxable— then it is a gain or profit. I’m not saying I agree with all this, but that’s how I read commercial. Financial gain, profit, taxable= “commercial” v. non profit

 

[CBMom01]

There’s a pretty clear distinction between:

spec renting and owners casually renting points
members personally using a majority of their points vs contracts never having the same names using the points
booking trends and abilities of professional vs casual owners

Can DVC address confirmed reservations through 3rd parties as commercial usage? I think something like that would have a positive impact for members. Casual owners can still rent and use their contracts for friends and family, but that would seriously dampen purely profit driven contracts. There’s a multitude of ways that has negative impacts.

For those of us intimidated by the points/reservation system confirmed reservations are the easiest. Plus, I assume those are people who had good reservations but had to change plans. Maybe I’m naive

 

[crisi]

No, this is the US, not China or North Korea (and David's is based in Canada), and there is no question of criminality. Any judge would give very short shrift to Disney demanding that a broker hand over its client list.

Subpoenas happen in law suits all the time. It doesn't have to be criminal for you to end up on the wrong end of a subpoena. I spent several years dealing with handing over data to lawyers due to non criminal contract law.

 

[mgarbowski]

Now, that does not mean that Disney will apply that definition. But clearly in putting the broad term “commercial” in the POS, they are giving themselves the option to do what they want now and in the future.

Another way I think about it is if the government says it’s taxable— then it is a gain or profit. I’m not saying I agree with all this, but that’s how I read commercial. Financial gain, profit, taxable= “commercial” v. non profit

No. It is a strong and standard principle of legal interpretation that you do not interpret one term in a contract or statute in a way that renders other provisions irrelevant.

The DVC terms contain provisions that explicitly contemplate fee-based rentals. If you re-interpret "commercial" to mean all third-party reservations for a rental fee, then those provisions regarding rental payments from third-party guests are rendered superfluous. Courts won't do that.

You cannot define "commercial" to mean making a profit. Commercial enterprises fail to make profits all the time. Under the "profit" definition, all failed businesses are non-commercial.

It also goes against standard use to isolate individual transactions. Non-profits routinely sell merchandise, and make profits on them which they use to subsidize their primary purpose. That does not disqualify them from being non-profits and render them commercial entities. Similarly, someone who uses their points mostly for personal use does not suddenly transform their membership into a "commercial purpose" with occasional rentals.

I have a serious photography hobby. I have spent thousands of dollars on it over the years. Very occasionally, someone contacts me to buy a print or license an image. On a net basis. I am nowhere near to making a profit. But I have to report every dollar anyone pays me on my taxes. And I definitely am not running a commercial photography business. Nobody would think that.

Nor does hiring a broker to facilitate the process make it commercial. Under this definition, everyone who sells their home using a broker is engaged in a commercial real estate business. Hiring an investment advisor does not make me a professional investor. Hiring a travel agent does not render one's trip to Disney a commercial venture. People hire professionals to assist in their private non-commercial activities all the time., but that does not transform the activity into being commercial.

Yes, there is some flexibility in interpreting "commercial purpose," but pretty much any attempt to cast the net as wide as people are trying to do in this thread is never going to succeed.

 

[RoseGold]

A lot of DVC owner are LLCs (or trusts). There is no "owner" to put the reservation in, even if they wanted to.

 

[AnnaKristoff2013]

I was, in part, addressing someone's vision of how DVC can restrict its rentals and someone indicating that Wyndham does something similar. In those posts, Wyndham sounds pretty restrictive, although I have zero knowledge of the program.

While it may not have a direct impact on DVC value, it does have an indirect impact, no matter how little. You wouldn't think twice about adding more DVC points to your portfolio if there was a personal rental restriction? I would. That little hesitation on perceived quality affects demand. Life happens and it's good to have a backup plan for your points rather than losing them.

Wyndham did a good job of decimating the rental market by cancelling reservations and putting the fear of god into renters. Why rent if there’s a chance your reservation gets cancelled? All Disney would have to do would be to start cancelling the rentals made by brokers who are buying stripping, renting, and selling to make a real dent in the market, since nobody will trust renting from those brokers if they know there’s a chance their reservations can be cancelled at the last minute, leaving them without a hotel for their trip.

 

[AnnaKristoff2013]

This is a point that I think gets less attention than it deserves. Often times the argument is made that "regardless of who owns the points, all points are equal and everyone has an equal chance of reserving every room" combined with some version of the "100% occupancy" justification.

However, if you stop to think about it, we have a good number of owners on these threads who individually have admitted (maybe not the best term because it implies some guilt or wrongdoing, which it does not) to owning in excess of 1,000 points (or much more) that are dedicated to renting to offset dues. If an individual owns over 1k points for personal rental, then someone engaged in the business of renting points as a commercial endeavor likely owns orders of magnitude more than that (10k, 15k?), across how ever many memberships/ownership schemes necessary. It also stands to reason that that individual or entity has the time dedicated to setting up the enterprise with any inexpensive databases, scheduling software, whatever to target the best/highest value weekends or holiday periods, and to walk reservations en-masse as necessary to ensure they have as many reservations placed where profit is maximized.

Imagine you're Joe Disney trying to walk that single reservation for a studio at AKL for Christmas week, while at the same time, Bob's DVC Rentals has 15 or 20 or more reservations that they are waking at the same time. Joe has to wake up at zero dark thirty to walk his res before heading to work. Bob's flunky wakes up, walks 20 reservations, then goes back to bed.

Or Bob’s DVC Rentals writes a script to do it automatically.

 

[DonMacGregor]

Or Bob’s DVC Rentals writes a script to do it automatically.

Exactly. Either way, it’s not a level playing field, regardless of how much some people want to believe it is.

 

[Sandisw]

Wyndham did a good job of decimating the rental market by cancelling reservations and putting the fear of god into renters. Why rent if there’s a chance your reservation gets cancelled? All Disney would have to do would be to start cancelling the rentals made by brokers who are buying stripping, renting, and selling to make a real dent in the market, since nobody will trust renting from those brokers if they know there’s a chance their reservations can be cancelled at the last minute, leaving them without a hotel for their trip.

But how do they apply one set of rules to certain owners and not others?

They can’t have a rule for membership owned by brokers and one by individual owners.

That’s not to say they can’t change the 20 rule limit, or try to redefine what it means to use your membership “for commercial purposes” which is what is prohibited.

It’s just the rules have to apply to everyone. Not suggesting there are not owners out there who are renting a lot, including brokers, but as I said, I’d bet a lot of money those memberships owned by the brokers are done is such a way that they are flying under the current radar of 20 reservations in a 12 month period.

 

[AnnaKristoff2013]

But how do they apply one set of rules to certain owners and not others?

They can’t have a rule for membership owned by brokers and one by individual owners.

That’s not to say they can’t change the 20 rule limit, or try to redefine what it means to use your membership “for commercial purposes” which is what is prohibited.

It’s just the rules have to apply to everyone. Not suggesting there are not owners out there who are renting a lot, including brokers, but as I said, I’d bet a lot of money those memberships owned by the brokers are done is such a way that they are flying under the current radar of 20 reservations in a 12 month period.

Right, I’m not disagreeing with you. I think they will redefine slightly what “commercial purpose” means, and then go after those members, by cancelling their reservations. They will probably be warned first (that’s what Wyndham did, but the people Wyndham warned disregarded the warnings). Again, If the “20 rental rule” can just be defeated by setting up multiple shell LLC’s and having employees of your business all buy, strip, rent, and sell contracts such that no one membership ever has more than 20 rentals in a use year, but your business as a whole does… Well then that rule clearly isn’t working as intended, and Disney has certainly left itself flexibility to deal with that problem by redefining the rule and giving some notice.

Edit: And Disney isn’t stupid. They can certainly figure out how to detect what the LLC’s are doing pretty easily. It’s being done blatantly and obviously at this point. Every contract bought and sold goes through ROFR, so Disney knows exactly who is buying, selling, stripping, renting, etc. People who are buying for personal use don’t buy a contract, use 3 years of points for reservations to random individuals, and then immediately sell the contracts.

The problem is that some of the brokers just got greedy. I think they’re forcing Disney’s hand.

 

[Sandisw]

Right, I’m not disagreeing with you. I think they will redefine slightly what “commercial purpose” means, and then go after those members, by cancelling their reservations. They will probably be warned first (that’s what Wyndham did, but the people Wyndham warned disregarded the warnings). Again, If the “20 rental rule” can just be defeated by setting up multiple shell LLC’s and having employees of your business all buy, strip, rent, and sell contracts such that no one membership ever has more than 20 rentals in a use year, but your business as a whole does… Well then that rule clearly isn’t working as intended, and Disney has certainly left itself flexibility to deal with that problem by redefining the rule and giving some notice.

Edit: And Disney isn’t stupid. They can certainly figure out how to detect what the LLC’s are doing pretty easily. It’s being done blatantly and obviously at this point. Every contract bought and sold goes through ROFR, so Disney knows exactly who is buying, selling, stripping, renting, etc. People who are buying for personal use don’t buy a contract, use 3 years of points for reservations to random individuals, and then immediately sell the contracts.

The problem is that some of the brokers just got greedy. I think they’re forcing Disney’s hand.

Honestly, I’d be shocked to see anything done because I think in the end it’s a lot of money to enforce and they themselves like being able to rent out their excess points.

And I’d bet the brokers are not the only ones buying, renting and selling.

 

[AnnaKristoff2013]

Honestly, I’d be shocked to see anything done because I think in the end it’s a lot of money to enforce and they themselves like being able to rent out their excess points.

And I’d bet the brokers are not the only ones buying, renting and selling.

I think the margins would be pretty thin to buy, rent, and sell if you’re not a broker yourself. The broker commissions would make that a dicey proposition. As to whether they will do anything, we will have to wait and see I guess. Maybe this email was a fluke, but my money is on them doing something about this eventually.

 

[we"reofftoneverland]

No. It is a strong and standard principle of legal interpretation that you do not interpret one term in a contract or statute in a way that renders other provisions irrelevant.

The DVC terms contain provisions that explicitly contemplate fee-based rentals. If you re-interpret "commercial" to mean all third-party reservations for a rental fee, then those provisions regarding rental payments from third-party guests are rendered superfluous. Courts won't do that.

You cannot define "commercial" to mean making a profit. Commercial enterprises fail to make profits all the time. Under the "profit" definition, all failed businesses are non-commercial.

It also goes against standard use to isolate individual transactions. Non-profits routinely sell merchandise, and make profits on them which they use to subsidize their primary purpose. That does not disqualify them from being non-profits and render them commercial entities. Similarly, someone who uses their points mostly for personal use does not suddenly transform their membership into a "commercial purpose" with occasional rentals.

I have a serious photography hobby. I have spent thousands of dollars on it over the years. Very occasionally, someone contacts me to buy a print or license an image. On a net basis. I am nowhere near to making a profit. But I have to report every dollar anyone pays me on my taxes. And I definitely am not running a commercial photography business. Nobody would think that.

Nor does hiring a broker to facilitate the process make it commercial. Under this definition, everyone who sells their home using a broker is engaged in a commercial real estate business. Hiring an investment advisor does not make me a professional investor. Hiring a travel agent does not render one's trip to Disney a commercial venture. People hire professionals to assist in their private non-commercial activities all the time., but that does not transform the activity into being commercial.

Yes, there is some flexibility in interpreting "commercial purpose," but pretty much any attempt to cast the net as wide as people are trying to do in this thread is never going to succeed.

Totally disagree with you. Disney has absolutely left the language vague so that they will be able to do whatever they want in terms of allowing/not allowing rentals. They will cast their net as wide as they want to and they have every right to do that in their contract. The fact that people are arguing over the definition of commercial on this thread is evidence that it is a vague term. Disney did that on purpose.

 

[mgarbowski]

Totally disagree with you. Disney has absolutely left the language vague so that they will be able to do whatever they want in terms of allowing/not allowing rentals. They will cast their net as wide as they want to and they have every right to do that in their contract. The fact that people are arguing over the definition of commercial on this thread is evidence that it is a vague term. Disney did that on purpose.

Not a single substantive response to multiple solid arguments.
I'm done. This is not worth engaging.
Have a nice thread all.